How serious? Does $2.2 billion and 15 percent EBIT profits sound serious to you? It does to me, and also to Deutsche Bank analyst Chris Whitmore.

Having slogged through Oracle’s 72-page document dump with a better eye for detail than mine, Whitmore noticed a line in a January 2010 email from Dave Donatelli, now head of HP’s Enterprise Group (specifically Exhibit 17, for those who want to scroll through and find it) saying that HP’s Business Criticial Server business combined with its Technology Services business, which includes the support and services associated with the Integrity line of servers that uses the Intel-made Itanium chip, was at that time larger on a revenue basis than HP’s personal computer business.

The same document, he says, showed that at the time, HP’s “owned operating profit” for the combined hardware, software and services tied to the business of selling and supporting Itanium servers was about $2.2 billion. All in, HP derives — or at least at that time derived — about 15 percent of its profits on an EBIT basis from Itanium and related businesses.

No wonder, then, that HP considered Oracle’s March 2011 decision to stop creating software that runs on the Itanium chip so earth-shattering that it hauled the software giant into court last June. That case is expected to head to trial any day now.

The disclosure is the clearest sign yet of how much HP stands to lose if its Business Critical Server business can’t recover. It has always been known to be a highly profitable business; exactly how profitable was a closely guarded HP secret. But sales of Business Critical hardware have been on the decline. In 2009, sales of BCS hardware were $2.6 billion. In 2011, they had fallen by 19 percent to $2.1 billion. And in the quarter ended Jan. 31, sales were $405 million, down 27 percent from the same period in 2011.

The uncertainty about Itanium’s future is one of the many reasons that Whitmore has been particularly bearish on HP’s turnaround prospects: “Given the growing uncertainty around the long-term viability of Itanium, we expect customer defections to continue, if not accelerate in future periods,” he wrote in a research note to clients, issued yesterday.

However, much as HP lawyers would like to argue that Oracle’s motivation is to help bolster long-flagging sales of its new Sun Microsystems hardware unit, Whitmore argues that the main benefactor is IBM: “While Oracle is responsible for shining a bright light on Itanium’s precarious future, it is probably doing IBM the biggest favor. … We expect IBM to be the greatest beneficiary of Itanium defections and view Power [IBM's server chip] as the market consolidator and eventual standard in the UNIX/RISC server market over the medium to longer term.”

And even if HP prevails in its suit, Whitmore isn’t seeing much benefit: “Regardless of the outcome of this particular suit, we expect HP-UX customers to continue fleeing what is increasingly looking like a dead platform — creating a major headwind for HP’s medium-term earnings.” Ouch.

They’re not quite as juicy — Oracle has always had the better flair for the dramatic in this case — but in releasing them, HP clearly intends to paint Oracle, the new owner of Sun Microsystems, as out to hurt HP by kicking it straight in the teeth by damaging its Business Critical Server operation.

The first of the batch is an instant message exchange between some Oracle sales guys, who happen to use salty language in relation to HP. (Sorry about that.)

The second appears to show that Mark Hurd, while still CEO of HP, was informed about Intel being both aggressive and excited about a forthcoming version of the Itanium chip, which would seem to run contrary to the argument Oracle has made that Intel was prepping for the Itanium line’s end of life, while allowing HP to lie about it to its server customers. In the message, Martin Fink, who figured so prominently in Oracle’s document dump today, writes to Hurd: “I’m not sure what exactly this means, but I have rarely seen Intel so agressive on anything to do with Itanium EVER, and they are working very hard to get this moving forward.”

Another, from February 2011, appears to show Oracle unwilling to release a security software patch for a version of one of its applications that runs on HP-UX and therefore on an Itanium-based server. Another from the same day is an email from Oracle CEO Larry Ellison to Thomas Kurian, senior vice president of Oracle’s server technologies, asking if support documents had been updated to specify “no more one-off patches for Itanium.” The date is key because Oracle first announced that it would no longer support Itanium systems on March 23 of that year. It should surprise no one that the top echelons of Oracle management knew this announcement was coming.

The next is an email showing HP getting ready for a big strategy launch. “Kinetic” was HP’s internal name for a strategy that leveraged all of HP’s IP that enabled mission-critical products into a cohesive whole. Plans for Kinetic included extending HP-UX and Integrity, HP’s line of Itanium-based servers, indefinitely, as well as bringing up X86 chips, like Intel’s more mainstream Xeon, under the “mission critical” umbrella. As HP sees it, this was the plan all along.
 
Finally the last one is another IM exchange between Oracle sales execs. Toward the end, one of them complains about being forced to sell Sun hardware that is described as a “pig with lipstick at best.” Again as HP sees it, once Oracle owned Sun it had every motivation to do whatever it could to hurt HP, including ducking out of previously contracted commitments.

As I did with the Oracle dump this morning, I collated everything into a single PDF. I think I got everything in chronological order this time. Read for yourselves!

HP-Itanium-docs.pdf

The documents were released as part of a new offensive by Oracle to ratchet up the pressure on HP and take its case to the marketplace — that HP and Intel had already planned to bring an end to the Itanium chip’s life, and that HP lied to its customers about the chip’s long-term future.

HP has long denied Oracle’s contention, and has tried to portray this as Oracle’s failure to live up to its end of a contract.

In an open letter to affected customers, Oracle said it was releasing the documents in order to allow customers to “make your own decision” on the matter:

Dear Customer:

A little over a year ago we announced that we would no longer be developing new versions of Oracle’s database and other products on the Intel Itanium platform due to our strongly held belief of Itanium’s imminent end of life. We ensured our Itanium customers would have an easy transition to the platform of their choice by committing to 10 years of support for existing Oracle software running on Itanium.

Hewlett Packard strongly disagreed with our characterization of Itanium’s future and launched an immediate campaign designed, in their words, to foment “customer outrage.”

At this time, there are many documents that have been disclosed through litigation that describe the true state of Itanium in Hewlett-Packard’s own words. Rather than us interpreting this situation for you, we thought we would give you access to the public HP documents so you can make your own decision regarding your investments in Itanium technology.

After reading these documents we are confident that you will agree with our decision, taken with the best interest of our joint customers in mind.

Sincerely,
Jeb Dasteel, Senior Vice President and Chief Customer Officer
Oracle

Bloomberg Businessweek got its hands on some of these trial exhibits, but in its posts this morning — and presumably in the tech section of this week’s magazine — stuck to a fairly limited set of highlights. And in fact there’s not so much that’s surprising, if you read my story on the unredacted version of Oracle’s cross-complaint from January.

Basically, the new documents add more color and a lot more tension to the state of the HP-Intel relationship over the production of the Itanium chip. It also lends a lot of weight to Oracle’s narrative heading into that trial: That HP relied heavily on profits earned from multiyear sales and support contracts with customers who bought its Integrity servers that run Intel’s exotic and expensive Itanium chip. In support of that, it paid Intel nearly a half-billion dollars to keep the chip alive, despite the fact that, outside of HP, there was no other single vendor using Itanium chips.

In the emails, Intel, for its part, certainly looks like it wants out of the business of making the chip, but is willing to accept HP’s money to keep churning them out. Asked at one point what would happen if HP didn’t pay a certain amount to Intel, Intel would — in the words of Martin Fink, then-head of HP’s Business Critical Server business — shut down the teams producing certain chips that were in the process of being designed, and slap “high fives all around.”

On its face, there’s nothing inherently wrong with HP paying Intel to keep making a particular chip. HP had customers willing to buy these servers, and it made money supporting them, so paying Intel to keep them coming — remember, HP for all intents and purposes, is the only vendor buying this chip — was more or less a cost of doing business.

However, Oracle’s argument has been that HP refused to play straight with the wider marketplace, insisting that Itanium would be around for many generations to come. Even Intel itself insisted that was true last year, when Oracle first announced that it would stop making new applications that support the chip, which of course led HP to sue last June.

AllThingsD has compiled all of these documents into a single 75-page document; you can read the entire collection below. They’re ordered by exhibit number rather than chronological order. I’ll probably have more to say as I go through them.

HP just sent a statement:

“Intel has provided unequivocal and repeated statements to the marketplace that Itanium is not at an end of life. The undeniable fact is there is committed support for Itanium that extends out toward the end of this decade. Statements that Itanium was at or near an end of life are false. With the unsealing of court filings, the public can see the undisputed facts of Intel’s Itanium roadmap clearly showing a long and sustained future for Itanium.”

An Intel spokesman had no comment, saying it is not a party to the lawsuit.

Update: So let me try to curate these documents a bit. They cover a time period beginning in August 2007, and go through to April 2011. In the first, (Ex. 6) Fink writes to another HP exec and says, “Intel dropped a bomb on us last night” during a meeting that included talk of “canceling Poulsen,” a future version of the Itanium chip that was on internal road maps. Poulson, for the record, is Intel’s code name for a 32 nanometer version of Itanium that was to be released sometime this year. The response: “Call Pat G,” referring to Pat Gelsinger, the once very senior Intel executive who was at one time widely considered to be a possible successor to current CEO Paul Otellini, but is now the COO at EMC, and likely to be its next CEO. Fink’s response: “I did, spent an hour … This was a high tension call.” Intel was worried that an HP server was being built using a competitor’s chip, presumably one from Advanced Micro Devices.

From there, skip forward to Exhibit 43. The email to Fink from Scott Stallard, now a retired HP exec, details a discussion with Intel’s Tom Kilroy, then VP of its enterprise business. The message to Intel: “Don’t possibly signal to the world” the end of the Itanium road map.

The next document is notes from a meeting between Intel and HP led by Otellini and then-HP CEO Mark Hurd in September of 2007. According to those notes, Intel’s Kilroy concedes that the then-current core used to build the Itanium chip has reached its end of life, and that there are two paths forward, one expensive, the other painful — a “crash landing.” Otellini then says that Intel can’t continue to lose money on the product. Hurd goes on to say that HP had by that time sold a combined $9 billion worth of Itanium-based servers, and that it “would be hard to walk away from those customers.”

Otellini then says, according to the notes, that “we need to address the inevitable on the future of Itanium.” Both sides then agree that over the next several years they’d like to glide toward using Intel’s more plentiful and more mainstream Xeon server chips, and essentially keep Itanium alive until 2013. Intel then proposed a new business model that would turn Intel essentially into a contractor for HP. Its goal would be not so much to make money on the Itanium business, but to stop losing money on it. Hurd agrees to take a serious look at the numbers.

Next in line is Exhibit 55, in which Stallard outlines the November 2007 Intel proposal to HP. The key point: HP would pay Intel $488 million over five years to keep building Itanium chips. It includes provisions for an annual “true up,” where Intel gets paid for any difference between its costs and what HP has already paid it for that year. Stallard writes: “So you ask, why should that be that we are forced to true up Intel to break-even? lt is because Tom [Kilroy] says Paul [Otellini] has been consistent on one thing all along, that if we do any other scenario than Tukvale (e.g. shut down the business early) then “Intel can’t lose any (more) money on this thing.’”

Next is Exhibit 15, a PowerPoint deck outlining the strategic rationale for HP to consider buying Sun Microsystems. Key phrase: HP-UX, its version of Unix developed specifically for Itanium servers, “is on a death march” because of Itanium’s inevitable demise. The slide also shows HP’s worries concerning a scenario in which IBM acquires Sun. The key phrase there: Such a deal “Isolates and exposes HP-UX as 3rd tier player, accelerates our decline (product/service) as customers look to consolidate vendors.”

We all know what happened instead: Oracle acquired Sun in 2010 and, in a stroke, took over its server business, giving Oracle an obvious motivation to cut its support for Itanium and hurt its new rival HP in the process. I’ve hit a few high points here, but I think you can get the gist from a careful reading of the documents below.

Update: I’ve re-uploaded the exhibits to Scribd in more logical order, so you don’t have to skip around. Sorry if that was confusing before.

Oracle Itanium Exhibits Chronological

New documents in the case came public yesterday, essentially spelling out Judge James Kleinberg’s ruling from May 1 in turning back Oracle’s motion for summary judgement. It’s not a terribly big deal, because both sides asked for summary judgement and failed to get it, as happens nearly all of the time in cases that get this far.

One key piece of their dispute arises from the fact that when they settled another lawsuit in 2010, stemming from Oracle’s hiring of former HP CEO Mark Hurd, there was, as HP argues, a provision included requiring Oracle to continue making software that supports servers running Intel’s exotic Itanium chip. A good deal of the fighting between the companies at trial is going to revolve around this point, and whether or not that agreement is enforceable or even exists. What that provision called for, essentially, was for Oracle to continue supporting Itanium as it had previously.

A key paragraph in the judge’s ruling:

“In the Court’s view, it is not unreasonable to interpret the Reaffirmation Provision as imposing a prospective obligation on Oracle to continue to offer products for HP’s platforms; the plain language is readily susceptible to that interpretation. If the prior, existing obligation before [Mark] Hurd’s hiring involved a clear and consistent practice in which Oracle offered its product suite on all HP platforms without written porting agreements or payments, then the Court sees no inherent contradiction in ‘reaffirming’ that this arrangement will continue going forward.”

Both sides in this case never miss an opportunity to poke each other in the eye with public statements. HP struck first last night:

“HP is pleased that the Court ruled that the language in the HP/Oracle agreement can be interpreted to require Oracle to continue porting its software products to the HP Integrity platform, as Oracle did for years before the agreement. As the ruling states, Oracle’s interpretation would make the agreement ‘illusory’ and ‘should be rejected.’ We look forward to trial, where the details of Oracle’s deliberate, anti-customer business strategy to drive hardware sales from Itanium to inferior Sun servers will be revealed.”

But it’s important to remember that HP lost its motion for summary judgement, too. Also, didn’t HP convince the judge that the Itanium provision of the Hurd settlement agreement means exactly what it thinks it does? At least that’s how Oracle attorney Dan Wall saw it, in a statement sent to AllThingsD this morning.

“HP cannot be happy with this decision. The Court did not accept HP’s interpretation of the Hurd settlement agreement; in fact, it rejected out of hand the most recent version of HP’s argument, which equated the contract with terms HP proposed, but Oracle rejected. HP’s lawsuit, like Itanium itself, is living on borrowed time and will never succeed.”

Anyway, the 29-page judge’s opinion that kicked off this latest pretrial PR salvo is below:

endorse_80790_203163_A

The U.S. Court of Appeals for the Federal Circuit ruled a California trial judge was too quick to deny Apple’s request to temporarily block the sales of Samsung tablets while Apple’s patent-infringement claims against its rival proceed in court.

Read the rest of this post on the original site »

In January, as the freshly crowned CEO of Yahoo, Scott Thompson initiated a series of dramatic acts to get the company back on track. The most notable was to make the boldest — or most boneheaded — move the head of Yahoo could make: Filing a patent infringement lawsuit against Facebook.

The controversial move was wildly unpopular in Silicon Valley, and even among many Yahoo employees.

But after a drawn-out weeklong controversy over a fake computer science degree on Thompson’s resume, he is reportedly headed out, and global media head Ross Levinsohn is in the driver’s seat as interim CEO.

Now one of the big questions is: Will Levinsohn take steps to repair Yahoo’s relationship with Facebook, especially since it has proved to be one of the most fruitful the ailing Silicon Valley Internet giant has seen in years?

Sources say that some members of Yahoo’s board, as well as the top exec, would welcome a settlement with Facebook on the litigation. Thompson was the main advocate of the in-your-face strategy against the social networking giant, levying a barrage of legal claims at a critical time — the quiet period before Facebook’s public offering this month.

So, if Yahoo wanted to turn back the tide of rancor toward Facebook, now is the time it could happen.

The lawsuit essentially deemed Facebook a thief of Yahoo’s social innovation, claiming that were it not for Yahoo’s many years of research and development, products such as Facebook’s News Feed, privacy settings, advertising models and more would never have come into existence.

“Facebook’s entire social network model, which allows users to create profiles for and connect with, among other things, persons and businesses, is based on Yahoo’s patented social networking technology,” one line from Yahoo’s lawsuit reads.

It’s unclear how much Levinsohn, acting as temporary CEO, will be able to change, in terms of the progress of the lawsuit. But if he’s looking to dial things back, his first call could be to Facebook COO Sheryl Sandberg, who would be instrumental in reaching some sort of detente in the case.

The initial act of aggression from Yahoo caught many in technology — including Yahoo’s employees — by surprise.

That’s because the various partnerships that the pair have struck in recent years have been hugely successful.

Yahoo’s Facebook-integrated Social Bar application, for example, has essentially been a traffic funnel from Facebook to Yahoo, with nearly 40 million monthly active users accessing the application, according to AppData statistics, and it is now one of the top Facebook apps.

It’s what Director of Product Development Jonathan Katzman called, in an interview last year, “the future of social for Yahoo.”

Finding a middle ground in some sort of settlement with Facebook could win back Yahoo detractors, a culture that praises innovation and largely rebuffs the practice of patent litigation as an act of trolling.

Facebook declined to comment, as did Yahoo, but several sources said to expect some movement sooner than later.

Asked to decide whether Google had infringed upon Oracle’s copyrights to certain parts of the Java programming language, the jury agreed that it had. But then, when asked to decide on four specific examples of that infringement, jurors could agree on only one: The rangeCheck method in TimSort.java and ComparableTimSort.java. Don’t ask me to explain exactly what it is, but it is being described widely as “nine lines of code.” And, unfortunately for Oracle, the damages it can collect are limited to somewhere in the neighborhood of $150,000 to $200,000, or less than pocket change for either company, not the $1 billion or more Oracle had said it wanted.

Jurors were also unable to decide if the portions of Java code that it copied could be protected by the long-established doctrine of Fair Use, under which certain infringements can be excused. Google lawyers pounced on this, and said they would move for a mistrial.

The conclusion is that Oracle proved at least part of its argument, but failed to prove the dramatic injury it said it had suffered. It also proved that Google knew that it needed a license to Java in order to use the portions of Java that it did use. The complication there was the fact that one flavor of Java is compatible with other flavors of Java: It still operates under the old “write once, run anywhere” principle that Sun Microsystems envisioned when it created Java. Oracle still wants Google to take out a commercial license that would require Google to maintain Java compatibility with other platforms.

Still undecided — and this is the big issue that has the eyes of the software industry watching this case closely — is whether Oracle can prevail on the issue of protecting software APIs using a copyright in the first place. Jurors were instructed to proceed under the assumption that this was a matter of settled law, when in fact it is not. Judge William Alsup will decide on this issue later, and it is unclear exactly how the jury verdict in the first phase of this case will affect his decision.

Had Oracle won a more ringing endorsement from the jury, that portion of the argument might seem to be stronger. It’s an important point that Google argued against, saying APIs shouldn’t be subject to copyright protection, because they’re more like tools and techniques that programmers use to build software. You can copyright a given program because it’s unique, but you can’t copyright the language it’s written in. The possibly strained analogy I came up with before is this: You can copyright a musical composition like Miles Davis’s “So What,” but you can’t copyright the form of music known as jazz.

Oracle argued at trial that copyright law offers the only proper protection for original expression in software, mainly because software advances are incremental, building upon previous advances and innovations. Laws governing trade secrets and patents don’t get the job done. Oracle lawyers contended that copyright law, while still imperfect, protects innovations and advances at a more granular level, but mainly against copying.

Also still ahead is the patent phase of the trial, where Oracle will assert that Google violated Java patents in building Android. After that, there will be a third phase, where the two parties will wrangle over damages. So far, it seems — unless Oracle prevails in the patent portion — that there won’t be much to wrangle over.

At least for now, it appears that Google has escaped the worst of Oracle’s accusations. That was the conclusion of shareholders of both companies. Google shares rose by more than 2 percent on the news of the verdict yesterday, closing at $607.55 a share. Oracle shares fell by more than 1 percent to close at $27.92 a share. The case isn’t over, and Google hasn’t exactly come out of it looking virtuous. But if the point of defending against a lawsuit is to escape paying huge monetary damages, Google won the day.

Embedded below is the filled-out jury questionnaire:

Verdict

“The court is well aware that it is being played as a pawn in a global industry-wide business negotiation,” Robart lamented after reserving judgment on the motions of Microsoft and Motorola for a later date. “The conduct of both Motorola and Microsoft has been driven by an attempt to secure commercial advantage, and to an outsider looking in, it has been arbitrary, it has been arrogant and frankly it appears to be based on hubris.”

Which, if you’ve been following these cases, is a reasonably accurate assessment. Using litigation to squeeze exorbitant licensing fees out of a rival for intellectual property is becoming par for the course in negotiations like those between Microsoft and Motorola, and as Robart points out, not only is that a drag, it’s often a waste of everyone else’s time.

Judge William Alsup is starting to talk about opening arguments for phase two of the trial, which will focus on patents. A third phase, assuming Oracle prevails, will focus on determining damages.

There was a false alarm late Friday when CNET and Bloomberg News reported that a partial verdict had been reached, when in fact it hadn’t. This happened after it became relatively clear that jurors were stuck and unable to agree on all four questions they have been tasked with answering.

Jurors have been asked to decide if Google’s use of 37 sections of Java source code — which Oracle owns, having acquired Sun Microsystems in 2010 — constitutes copyright infringement; or if, as Google argues, the copied sections are so insignificant as to amount to “no big deal.”

Oracle sued Google in 2010, after closing the Sun deal. Google stands accused of using some parts of Java to create Android without having first obtained the relevant licenses — first from Sun, then from Oracle — that, among other things, required compatibility with other flavors of Java.

Jurors have reached no conclusion in the case and Judge William Alsup has sent them home for the weekend with instructions to try again on Monday.

The jury had indicated Thursday in a note to Alsup that it was stuck on some point. Alsup warned lawyers for both sides that they might have to prepare for a deadlocked jury. Obviously, the situation here is fluid. I’ll have more in this post as it comes in.

There are four questions the jurors are tasked to answer, and they’re said to be unanimously agreed on three of them, but unable to reach consensus on the fourth, though its unclear which are which.

For what its worth, below is the form with the four questions the jurors have to answer.

Jury Questions

The Associated Press reported that a note to Judge William Alsup asked what would happen if jurors were unable to come to a conclusion, and indicated that some jurors are not budging from their positions.

Alsup called jurors into the courtroom for a talk, then sent them home so they could “start fresh” today. Bloomberg Businessweek reported that Alsup told lawyers that it’s possible the jury is deadlocked. If that’s what happens, Alsup said, the parties would move immediately into the second phase of the trial, which covers patents.

Jurors have been asked to decide if Google’s use of 37 sections of Oracle-owned Java source code constitutes a copyright infringement, or if, as Google has argued, the copied sections are so insignificant as to amount to “no big deal.”

Oracle sued Google in 2010, after acquiring Sun Microsystems and becoming the owner of the Java programming language. Google stands accused of using some parts of Java to create Android without having first obtained the relevant licenses — first from Sun, then from Oracle — that, among other things, required compatibility with other flavors of Java.

The jury has been deliberating since lawyers for Google and Oracle wound up their arguments on Monday.

(Image courtesy of Icanhascheezburger)

The jury has had the case since Monday, and as yet there’s no indication of when its deliberations will be complete.

The basic questions jurors are wrestling with concern whether and how it is or isn’t okay for a company to copy portions of software code that would otherwise require a commercial license. Also looming large over the proceedings is whether or not a programming language can by itself by protected by copyright. Oracle lawyers argued at trial that it can, but this is by no means a legal slam dunk.

Google lawyers, for their part, argued that the copying was insignificant, or “no big deal whatsoever.”

Oracle sued Google in 2010, after acquiring Sun Microsystems and becoming the owner of the Java programming language. Google stands accused of using some parts of Java to create Android without having first obtained the relevant licenses, first from Sun, then from Oracle, a license that among other things required compatibility with other flavors of Java.

Once the jury comes back, which could be as soon as today (but we thought that earlier this week), the trial will shift to a second phase over patents. After that, assuming Oracle prevails in one or both of the first two phases, a third phase will determine the amount of damages, if any. The full trial is expected to last two months.

Lots of people are waiting on the outcome of this first phase, however. To all of them, I dedicate Tom Petty’s “The Waiting.”

In his appearance, McNealy said that, as he remembers it, Google was asked to take out a commercial license on Java. “There is a Java specification license document available,” he said, that didn’t contain any financial requirements, but it did require compatibility.

McNealy had been called as a witness by Oracle, and on the stand he said that it was Sun’s practice to let other companies use Java, but only with a commercial license, and that its primary requirement was that the licensee ensure that Java remain compatible.

While numerous other phones from the likes of Nokia, Research In Motion and Motorola were compatible with Java applications, those on Android weren’t. Compatibility is one of the main points over which Oracle has been arguing with Google. Oracle contends that not only did Google violate its patents and copyrights, but it then went on to build its own incompatible version of Java, fracturing one of the oldest premises of Java’s existence: Write once, run anywhere.

McNealy is also running a poll on Twitpolls, asking people to vote for which side they agree with. (Google is ahead as of this morning.)

Who is right in the Oracle vs. Google lawsuit? reply w/ #oracle #google #neither #both http://t.co/aWdhzPbO

May 1, 2012 1:44 pm via GetTwitPollsReplyRetweetFavorite

@scottmcnealy

Scott McNealy

And he promotes a similar poll on his own new venture’s site, Wayin.com, where, as of this morning, the vote is favoring Oracle.

Meanwhile, the jury is still out, and the world is still waiting for a verdict. It could come today.

Anyhow, here’s the video of McNealy’s six-minute TV interview:

A Microsoft spokesperson, however, said Motorola is prohibited from acting on the court’s decision because a U.S. court granted Microsoft a restraining order on April 11 to prevent Motorola Mobility from taking action based on the Mannheim court’s ruling.

Read the rest of this post on the original site »

The jury in the Oracle-Google trial will begin its second day of deliberations today, following a round of closing arguments by lawyers for both sides.

From Oracle’s perspective, the basic question jurors will have to answer, as its lawyer Michael Jacobs put it, is whether it’s okay for one company to use another company’s intellectual property without permission. (See Jacobs’ slide deck, embedded below.)

Google attorney Robert Van Nest argued that the amount of Oracle IP that it used was so small as to be “no big deal whatsoever.”

Oracle sued Google in 2010, after Oracle acquired Sun Microsystems and thus became the owner of its Java programming language. Google is accused of using some parts of Java to create Android without having first obtained the relevant licenses, first from Sun, then from Oracle.

Monday’s closing arguments constituted the end of the first phase of the trial, which has also turned into a closely watched battle of the proper use of copyrights over software.

Once the jury comes back, which could be as soon as today, the trial will shift to a second phase concerning patents, after which a third phase will determine the amount of damages, if any. The full trial is expected to last two months.

Judge William Alsup, in his final instructions to the jury, reiterated the parameters of the case, telling panelists that copyright protection covers the “expression of ideas,” but not methods of operation. He said the copyrights Oracle has exerted cover the “structure, sequence and organization” of software code.

Google has argued that APIs shouldn’t be subject to copyright protection because they’re more akin to tools and techniques that programmers use to build software.

Oracle has argued that copyright protections should apply because they’re more granular and targeted than trade-secret law or patents.

day11-closing-1609612

(Image courtesy of icanhascheezburger.com)

HP sued Oracle over what it says is an agreement to continue to create software that will run on HP systems running Intel’s Itanium chip, an agreement that HP argues was struck as part of the settlement that ended a suit stemming from former HP CEO Mark Hurd’s joining Oracle in 2010. Oracle, for its part, has argued that Intel plans to phase out the Itanium chip, a specialized server chip that never saw any real success in the marketplace, in order to focus more on its mainstream Xeon line of server chips and has only been producing them because HP has been paying it to do so.

The pair lobbed dueling filings at each other yesterday. In Oracle’s filing, which is the first of the pair embedded below, its lawyers accuse HP of trying to have the court write the contract it says it never agreed to in the first place: “HP has now been forced to admit that the fuzzy, feel-good language in the Reaffirmation Provision would fail as a porting contract on its own — unless the Court supplies numerous detailed terms inferred from the parties’ course of dealing.”

In the second of the two filings embedded below, HP makes the point that Hurd, once HP’s CEO and now Oracle’s co-president, had previously worked with Intel on Itanium-related matters. The key quote from the introduction:

“When asked point blank at his deposition whether it was misleading for HP not to publicly disclose the ICA [Itanium Collaboration Agreement], Oracle’s Co-President stated definitively: “No.” Thus, to prevail on its false advertising claims, Oracle must establish that its own Co-President was responsible for a fraudulent scheme while he was the CEO at HP, and that Mr. Hurd perjured himself at deposition. Although, and somewhat incredibly, Oracle recently stated on the record in response to this Court’s question that Mr. Hurd was part and parcel of this alleged scheme and pattern of lying, Oracle has no evidence to support this claim against Mr. Hurd. In any case, the fact that Oracle is even going down this path against its current Co-President reveals the absurdity of its entire claim.

Here, you can read them in the original, Oracle’s first:

Oracle Reply Msa 1599529

And now HP’s filing:

HP Reply in Support of Cross Claim MSJ

In a ruling that came down late Wednesday (see the opinion below), Judge Lucy Koh ruled that the existence of agreements between the various companies not to “cold call” employees of the other supports a “plausible inference” that the agreements were signed off at the highest levels by senior executives of each company.

Plaintiffs in the case, all former software engineers who have worked for the various companies, have claimed that the late Apple CEO Steve Jobs, negotiating with Ed Colligan, the former CEO of Palm (now a unit of Hewlett-Packard), talked directly about the matter. Their complaint quotes Jobs as telling Colligan, “We must do whatever we can” to stop cold-calling efforts between the two companies.

The companies being sued are Apple, Intel, Adobe, Google, Intuit, Lucasfilm and Pixar, a unit of Walt Disney. The complaint alleges that the companies conspired to make it harder for employees to move to different jobs between the companies, thus limiting their ability to earn higher salaries. The companies had sought to get the case thrown out.

You can read Judge Koh’s opinion below.

Poaching Case Ruling

Oracle CEO Larry Ellison will take the witness stand today in his company’s lawsuit against the search giant Google. In what has been described as the World Series of intellectual property lawsuits, Ellison will be examined by Oracle lawyers in the case, in which Oracle has accused Google of infringing both patents and copyrights on Java while it was working to create the Android mobile operating system.

Ellison’s testimony will come after Oracle lawyers make their opening arguments. You can get a pretty good idea of what they’re going to say from this 91-page PDF posted overnight to the Oracle Web site.

Oracle sued Google in 2010, alleging that the Android mobile operating system violated seven different Java patents. Five of those patents have since been tossed out since they were reexamined, leaving two. That reduces the potential amount of damages Oracle might be entitled to should it prevail. Google offered Oracle a share of Android revenue and $2.8 million in damages in the event that it prevails; Oracle declined. Oracle has also accused Google of infringing copyrights on Java APIs.

Google has denied the infringement claims, and is expected to argue that Java APIs can’t be protected by copyright because they’re more akin to programming languages. Software developers everywhere are paying close attention to this part of the trial.

The parties are the software giant Oracle and the Internet concern Google. At issue is Java, the software platform Oracle became owner of when it acquired Sun Microsystems in 2010. And the witness list will be interesting: Both Google CEO Larry Page and Oracle CEO Larry Ellison are expected to take the witness stand during the trial; as will former Sun CEO Jonathan Schwartz and Andy Rubin, the Google senior vice president who runs its Android and mobile operations.

The allegations are fairly simple, but the case could have some significant impact if Oracle prevails in some of its arguments. Oracle sued Google in the summer of 2010, alleging that the Android mobile operating system violated seven different Java patents.

Five of those patents have since been tossed out since they were reexamined, leaving two. That reduces the potential amount of damages that Oracle might be entitled to, should it prevail. Google even went so far as to offer to cut Oracle in on Android and $2.8 million in damages, in the event that it prevails. Oracle declined.

The other issue, and the one that has the potential for more lasting impact, is over copyright. Oracle will argue in court that Google violated copyrights on Java. Specifically, Oracle alleges that when Google was creating Android, it copied a lot of material — more than 37 Java application programming interfaces (APIs), and 11 lines of Java source code — and that these are subject to copyright protection like other intellectual property.

This is a new and controversial legal argument that has software developers watching the trial closely. Google has argued that APIs shouldn’t be subject to copyright protection, because they’re more akin to tools and techniques that programmers use to build software. I may be simplifying it a little too much here, but one way of thinking might be to ask if it’s possible to copyright the technique and instructions for hammering a nail or fitting a door.

Google has argued that APIs and programming languages aren’t entitled to copyright protection, for exactly that reason: You can copyright a given program because it’s unique, but you can’t copyright the language it’s written in. Perhaps I’m straining my skills at analogy here, but the way I understand Google’s argument, as put forth in an April 12 brief, is that you can copyright “So What?” but you can’t copyright “jazz.”

As Google puts it in that brief, which is the first two of two legal filings I’ve embedded below:

“That is a classic attempt to improperly assert copyright over an idea rather than expression.” And earlier in the brief, it argues: “Without a computer programming language, the set of statements or instructions cannot be understood by the computer. As such, a computer language is inherently a utilitarian, nonprotectable means by which computers operate. … The protectable material is the computer program (the set of statements or instructions); the unprotectable material is the method or system (the language). So understood, original computer programs may be protected, but the medium for expression in which they are created is not.”

For its part, Oracle outlined its position on the issue in a trial brief filed on April 5, which is the second of the two documents embedded below. Here’s a meaty paragraph summing it up:

“Allowing copyright protection for computer interfaces makes sense because original expressions in software are innovations of an incremental sort that Congress meant to encourage. Trade secrecy law cannot achieve this goal because interfaces can be reverse-engineered. Patent law, because of its novelty and non-obviousness requirements and examination process, protects those substantial innovations, claimed as broadly and generically as possible, and in return gives strong protection against even those who independently develop the same technology. Copyright law protects innovations at a much finer level of detail (where original expression can be found) than patents ever could, but only offers protection against the copyist.”

Obviously, it’s going to be an interesting trial, provided the parties don’t find some way to settle before it’s all over. They tried settlement talks once. It didn’t work.

Google Brief

Oracle Brief

Facebook has just taken strong aim back at Yahoo’s patent lawsuit with an answer and counter-claim filing of its own, alleging infringement over a number of issues.

“From the outset, we said we would defend ourselves vigorously against Yahoo’s lawsuit, and today we filed our answer as well as counter-claims against Yahoo for infringing ten of Facebook’s patents,” said Ted Ullyot, general counsel of Facebook. “While we are asserting patent claims of our own, we do so in response to Yahoo’s short-sighted decision to attack one of its partners and prioritize litigation over innovation.”

In its counter-claim filing involving 10 patents held by Facebook, the social networking giant said that Yahoo is infringing via a wide range of its offerings, including its homepage, content optimization, relevance engine, Flickr photo-sharing service and advertising throughout its huge site.

You know: The ads that make up most of Yahoo’s revenue.

In other words, Facebook CEO and co-founder Mark Zuckerberg does not like being poked by new Yahoo CEO Scott Thompson, especially on the eve of a $100 billion IPO.

You might have heard that Facebook is going public and it’s a big deal around Silicon Valley, which is why no one much liked Yahoo’s skunk-at-a-garden-party legal move two weeks ago.

Yahoo fired back at Facebook’s firing back, in a statement:

“We have only just received Facebook’s answer and counterclaims, but on their face we believe they are without merit and nothing more than a cynical attempt to distract from the weakness of its defense. As we have made clear from the outset, the unauthorized use of our patented technology is unacceptable and must be resolved appropriately. Other leading companies license these technologies, and Facebook must do the same or change the way it operates. We have proposed that Facebook join us in discussions to resolve the matter, but our overtures have been rejected. As a result, we are prepared to continue to seek redress through the courts.”

The new filing could not come at a worse time for Yahoo, which will announce thousands of layoffs of employees tomorrow morning, in a wrenching restructuring to revive its lackluster business.

In its legal filing, Facebook also pushed back on assertions in Yahoo’s initial patent lawsuit, noting that it denies that “[w]ithout Yahoo!’s achievements, websites such as Facebook would not enjoy repeat visitors or substantial advertising revenue.”

I think Facebook — which is sure to try to drag this thing out for a long, long time — just called Yahoo a tech loser.

Here is the full document:

FB_ANSWER_AND_COUNTERCLAIMS

More to come, obvi.

Here I am talking about the whole enchilada on WSJ Live’s News Hub.

Details of the back-and-forth emerged in a filing made by lawyers for the two companies, proposing ways to speed up the trial process. (See the filing embedded below.) Their trial over Java — of which Oracle became owner when it acquired Sun Microsystems in 2010 — is set to begin in less than three weeks.

There are basically two patents left at issue in the case, and Google proposed to forgo fighting Oracle in the event it won and proved infringement. Oracle said the $2.8 million figure Google offered — $2.72 million for one patent, and $80,000 for the other, for past damages — was too low: “Oracle cannot agree to unilaterally give up its rights, on appeal and in this Court, to seek full redress for Google’s unlawful conduct,” the company says in the filing.

Google also offered Oracle a 0.5 percent of Android revenue through the end of this year, when one of the disputed patents expires; and 0.015 percent of revenue for the other, when it expires in 2018. “Under such a stipulation, Oracle would be assured a recovery without proving damages, but could not obtain an injunction based on these patents,” Google says in the filing.

Goog Orcl Streamline

Lawyers for both HP and Oracle filed arguments seeking summary judgement in their fight over whether or not Oracle has the right to stop making software that has been ported to run on computers using Intel’s obscure Itanium chip. Oracle said last March that it would no longer support the chip, which is, for all intents and purposes, only used in certain exotic high-end systems sold by HP. For its part, HP has argued that Oracle is bound by a contract to continue to support the chip for several more years. I’ve embedded the competing filing documents below.

The legal moves naturally touched off a renewed salvo of public statements between them that added some interesting details to the proceedings, and which provide some fair insight into how the two players are going to argue at trial. Basically, it’s going to come down to whether or not the two companies have an enforceable agreement that was struck as part of a wider settlement they reached when they settled another lawsuit that followed former HP CEO Mark Hurd’s hiring by Oracle.

Meanwhile, Oracle insists that HP and Intel are lying to the marketplace about the future prospects of the Itanium chip, and has characterized their efforts to keep the chip alive in the marketplace as “a remake of ‘Weekend at Bernie’s.’”

HP scored first:

“The information brought to light during the discovery period further underscores the key facts of this case. In fact, it has led HP to seek a pretrial ruling that Oracle is contractually obligated to offer future versions of Oracle’s software on Itanium. It is time for Oracle to quit pursuing baseless accusations and honor its commitments to HP and to our shared customers.”

HP’s statement then went on to use several historic statements by Oracle, emphasizing the partnership and commitment to Itanium. It even quoted Oracle CEO Larry Ellison:

“Ellison testified that in making his decision to issue Oracle’s March 22 announcement that Itanium was “nearing the end of its life,” he relied on a conversation with Intel’s chief executive officer, Paul Otellini. But Ellison admitted under oath that Otellini did not say that Itanium was nearing the end of its life. And the Intel executive responsible for the Itanium business has now testified unequivocally that Oracle’s claim was not true.”

Oracle attorney Dan Wall issued a pair of statements, and one was more or less the standard summary of that company’s position: So important an agreement as the one that would obligate Oracle to extend a strategic partnership wouldn’t be contained in a settlement over what was essentially a dispute over a noncompete agreement.

“We don’t believe, nor do we think HP really believes, that a settlement agreement relating to Mark Hurd’s employment could possibly obligate Oracle to write new software for a platform that is clearly end of life. We are pleased the Court now has the evidence needed to see HP’s purported contract claims for what they are.”

Then, apparently after seeing HP’s extensive statement , Wall shot back with more extensive — and interesting comments. He cites testimony fromformer HP chief communications officer Bill Wohl as admitting that the lawsuit was more or less a public relations stunt that was part of a wider campaign intended to raise outrage among their shared customers and force Oracle to reconsider.

“Rather than filing a legal motion, HP has yet again filed a press release that continues its campaign of lies about the Itanium roadmap. HP’s PR Director admitted the lawsuit was conceived as part of a campaign designed to ’foment customer outrage.’  HP’s documents and executive deposition testimony make indisputable the fact that Itanium is nearing the end of life as Oracle said. Intel documents confirm that as well–which is why despite repeated efforts by HP to get Intel to refute Oracle’s March 22 press release, Intel has refused to say more than that it intends to deliver the two announced versions of Itanium.

“The status of Itanium, meaning its impending end of life, has been maintained as one of HP’s most ’closely guarded secrets’ from customers, partners and HP employees alike in order to avoid giving its sales organization ’another reason not to sell’ Itanium and to continue to ’milk’ maintenance profits from its customers. HP documents reference HP-UX on Itanium as on a ’death march’ and confess that Intel would be doing ’high fives’ to no longer have to develop the chip given its poor performance and market traction and the huge opportunity cost associated with it. HP’s documents also contemplate various options to deal with the inevitability of Itanium’s end of life, including paying Intel to ’elongate’ its life. HP’s documents make clear that HP was intent on ’creating a market perception of long term viability’ and introducing versions of the chip that are ’more of an illusion than of technical significance.’ In other words, HP’s strategy was to mislead the market and its customers as to the real status of Itanium. Oracle will not participate in this fraud.”

The history and context of this lawsuit is long and complicated, and fraught with the fact that for a time, HP was run by former SAP co-CEO Léo Apotheker at a time when Oracle and SAP were locked in their own nearly-nuclear multiyear legal battle. The fact that former Oracle president and Ellison enemy Ray Lane is HP’s executive chairman only adds to the enmity.

However, there’s evidence to show that HP is the one being hurt the most by the ongoing fight. Without the support and maintenance fees that HP collects from companies who buy its Itanium-based servers, the company is, in the words of one of its own executives, “strategically screwed.” Amid the doubts brought on by the fight with Oracle, sales of HP’s highly profitable business-critical servers have suffered. And with the printer business suffering and PC sales flattening, that is the last thing HP needs.

Oracle, by all appearances, can afford to let its Itanium business die, and has argued that Intel would like nothing better than to get out of the business of making Itanium chips that are only profitable with subsidies from HP; and that it has quietly planned to let the chip reach the end of its life and transition customers over to its more mainstream Xeon chip, which it now says is “suitable for any workload.”

Anyway, the dueling filings are below, HP’s first:

HP Summary Motion

Oracle Summary Motion